Asia stocks set for muted start; S&P 500 climbs

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(July 1): Asian stocks were poised for a muted start to July after the strongest quarterly rally since 2009, with investors assessing better-than-estimated U.S. economic data amid concern over new coronavirus cases and fragile trade relations with China.

Futures edged up in Japan and dipped in Australia, with Hong Kong closed for a holiday. The S&P 500 extended its second-quarter rally to 20% as a report showed consumer confidence posted its biggest increase since 2011. After the close of regular trading, FedEx Corp. soared as the economic bellwether used an efficiency drive and a surge in health-equipment deliveries to shore up earnings. Treasuries and the dollar fell. Gold traded near $1,800 an ounce.

Accelerating virus infections are threatening to set back reopenings and stall the economic recovery. New cases could rise to 100,000 a day if behaviors don’t change, infectious-disease expert Anthony Fauci said. Federal Reserve Chairman Jerome Powell stressed to Congress Tuesday that getting the coronavirus under control was vital as the U.S. economy rebounds. After massive monetary and fiscal policy stimulus, signs that the crisis may linger longer could increase pressure for more aid.

“The downside has become more limited given how many investors missed the rebound, how many remain bearish and how much cash has been sitting on the sidelines,” wrote Esty Dwek, head of global market strategy for Natixis Investment Managers. “Coupled with abundant stimulus measures and liquidity, corrections are likely to be bought. That said, we remain prudent and believe it is too early to add a lot of risk to portfolios.”

U.S. equities briefly pared gains Tuesday after the Federal Communications Commission designated Huawei Technologies Co. and ZTE Corp. as national security threats. Traders also monitored news that Hong Kong for the first time banned its biggest annual protest march, a decision attributed to outbreak-control measures that comes after Chinese lawmakers approved sweeping national security legislation for the former British colony.

Here are some key events coming up:

    The monthly U.S. jobs report will be released on Thursday.

These are some of the main moves in markets:
Stocks

    The S&P 500 jumped 1.5% on Tuesday.
    Futures on Japan’s Nikkei 225 rose 0.3%.
    Futures on Austraila’s S&P/ASX 200 Index slipped 0.1%.

Currencies

    The yen was at 107.97 per dollar.
    The offshore yuan traded at 7.0700 per dollar.
    The Bloomberg Dollar Spot Index fell 0.2%.
    The euro bought $1.1232.

Bonds

    The yield on 10-year Treasuries jumped about four basis points to 0.66%.

Commodities

    The Bloomberg Commodity Index advanced 1.1%.
    West Texas Intermediate crude added 0.3% to $39.82 a barrel.
    Gold climbed to $1,780.96 an ounce.